Kutxabank Reduces Its Exposure to Real Estate by 70% in Five Years


21 August 2017

Kutxabank has reduced its exposure to the real estate business by 70% since the bank’s creation in 2012, having reduced its total exposure by 4.7 billion euros, with a further decline of 11% in the last year.

The financial institution has gone from the €7 billion in real estate loans and assets that it held in 2012, to 2.3 billion euros at the end of June 2017.

The sale of its real estate subsidiary Neinor to Lone Star in 2014 was decisive. The deal transferred 900 million euros in real estate assets and more than 90 employees to the American fund.

Kutxabank has continued to decrease its presence in the real estate business over the last year, by 11%.

The Basque group achieved this reduction without transferring assets to the Asset Management Company that was created in the bank restructuring (Sareb), and without receiving public aid, while contributing to the restructuring of the Spanish financial system, through its contribution to the Deposit Guarantee Fund and to the capital of Sareb itself.

Nevertheless, the group is maintaining its policy of acting in the mortgage loan market. Thus, according to Kutxabank, the financial institution is the second of 14 supervised by the European Central Bank in terms of the weight of its loan portfolio on its total assets, and the first in terms of loans to individuals for the acquisition of housing both on total assets and on total credit, with high levels of collateral in all its lending.

Its risk policy places the Basque group as one of the institutions with the lowest volume of refinancing and the institution with the second lowest level of delinquency due on its assets in Spain.

Specifically, at the end of the first half of 2017, Kutxabank had a default rate of 5.66%, 200 basis points less than at the time of its incorporation in 2012, and less than half that in March 2014, the time in which delinquencies reached the highest levels.

Original Story: EFE Madrid / Expansión

Translation: Richard Turner